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Will The Fed Start Raising Interest Rates Later This Year?

Warren Buffett has his doubts, and so do plenty of other analysts. Weak economic activity overseas is arguably a factor that could delay the onset of US tightening. Based on the domestic trend, however, the case for raising rates soon is compelling, according to Cleveland Fed President Loretta Mester, who said earlier this week that,

If incoming economic information supports my forecast, I would be comfortable with liftoff in the first half of this year.

Judging by the ongoing fade in the year-over-year change in the real monetary base, the Fed seems to be laying the groundwork for a round of tightening in the near-term future. The St. Louis Adjusted Monetary Base (deflated by the consumer price index) advanced just 4.0% in the year through December 2014, a world below the 37% surge that we saw at the end of 2013.